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IRIS. Look forward

IRIS PAYE-Master

COVID-19, Furloughed Employee &

Job Retention Scheme Payroll

Processing Changes

May 4th, 2020

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Contents

Furlough Payments ........................................................................................................................ 3

Summary of software changes.............................................................................................................. 3

Step 1: Make Furlough Payments ......................................................................................................... 5

Additions/Deductions .......................................................................................................................................... 5

Original Payslip .................................................................................................................................................... 9

Furloughed Payslip .............................................................................................................................................. 9

Step 2: Enter required fields .................................................................................................................. 9

Company Details ................................................................................................................................................ 10

Employee Details ............................................................................................................................................... 10

Step 3: Select Claim Period and Employees to include .................................................................... 11

Step 4: Check and Edit Furlough values ............................................................................................. 12

How Furlough Reclaim is calculated ................................................................................................................ 13

Step 6: Enter Bank and Contact Details for the Reclaim .................................................................. 16

Personal Bank Details ....................................................................................................................................... 16

Contact Details ................................................................................................................................................... 16

Step 7: Print the Furlough Reclaim report ......................................................................................... 16

Step 8: Create the Furlough Reclaim file for upload to HMRC ........................................................ 17

Other important information ..................................................................................................... 18

Employment Allowance ........................................................................................................................ 18

Direct Earnings Attachments (DEA) .................................................................................................... 18

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Furlough Payments

This document aims to give you guidance on processing Furlough Payments in PAYE-Master and

will walk you through our new Furlough reporting tool. The new tool calculates reclaim values,

making it easier for you to submit your claim to the government via the Coronavirus Job

Retention Scheme. The information contained herein was correct at the time of publishing but is

subject to change as HMRC define the furlough legislation.

Further information can be found here.

This guide will take you through a series of steps required to pay furlough, create a report to

show furlough reclaim values and create a file that can be uploaded to HMRC.

Summary of software changes

The changes implemented in IRIS PAYE-Master to cater for Furlough Payments and Reclaim will

allow you to:

1. Identify the pay element(s) you have used to make furlough payments

2. Enter furlough dates for employees

3. Enter/calculate Top-up payments

4. View/amend Furlough Payment and Reclaim Amounts

5. Print the new furloughed employees report for the claim period. The report shows all

employees’ furlough pay, including their employer’s NI and employer’s pension reclaim

values. The report will calculate the practice’s claim values for entry into the HMRC Job

Retentions Scheme Portal

6. Create an output file that is suitable for upload to the Job Retention Scheme Portal. Like

the report, the output file will include all your furloughed employees with their associated

claim value

to do so by your NHS organisation.

NOTE: It is important that you identify the pay element(s) you have used to make furlough

payments and you enter your employees’ furlough dates, so that we can calculate your JRS

claim accurately. If you do not wish to identify separate pay elements for furlough pay, we

can still help you to create an output file. To do this you must enter your employee furlough

dates. Where you have not identified the furlough payments separately, we cannot

guarantee the reclaim values produced on the report or in the output file.

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Enter Furlough Payments, Furlough Top-up Payments and any normal pay due

Ensure fields required for the creation of the export file are complete

Use the Furlough tool to select the claim period, along with the employees that have

been furloughed

Use the Furlough tool to enter any Furlough Payments you made without

using a specific Payment/Deduction

Use the Furlough Tool to enter Bank & Contact Details

Print the Furlough Reclaim report

Create the Furlough Reclaim file for upload to HMRC

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Step 1: Make Furlough Payments

The first step in the process is to calculate pay for the periods where employees were

furloughed. The recommended way to make furlough payments is by creating a specific

Addition/Deduction for the 80% Furlough Payment. If you want the employee to be paid at their

normal full salary, we also recommend you create another Addition/Deduction for the remaining

20% of pay. We have added a new indicator to the Addition/Deduction screen where you can

specify that a payment was for Furlough Pay. Selecting this indicator will ensure that the

Addition/Deduction is used in the calculation for Furlough Reclaim – even for periods you have

already processed.

If you have already calculated payroll for furloughed employees and didn’t create specific

Addition/Deductions for the furlough payments, don’t worry. You will still be able to calculate the

reclaim values although you might just need to add a few more details in the Furlough reporting

tool. For future periods, we would suggest you follow the advice listed below to make the

reclaim process much easier moving forward.

Additions/Deductions

Salaried Employees

For salaried employees we recommend you create a new payment with a name that is easily

identifiable e.g. Furlough or Furlough 80%.

To do this:

1. From the Company menu, select Additions/Deductions

2. Click the next available ‘unused’ row in the grid

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3. As the payment is subject to tax and NI, tick the Tax and NI columns

4. Also tick the Pen and QE columns in respect of Pensionable and Qualifying Earnings

5. Tick the Fur column; this will identify the payment as being for furlough when the reclaim

calculation is performed

6. Click Save

Once saved, you can use the

new payment in Pay Variations

to pay your employees 80% of

their usual pay. To process this

as a one-off payment, enter the

value of the payment in the

Temp Amount field. To retain

the value for future periods,

enter the value of the payment

into the Std Amount field

If you intend on paying your employee 100% of their pay whilst furloughed, we advise that you

follow the steps above to create another addition, this time for Furlough Top-up and pay the 20%

of salary against this addition/deduction. Do not tick the Furlough column.

Things to consider

▪ You will have to alter the normal payment (e.g. salary) each time you process payroll.

Alternatively, you could temporarily set the salary to zero in the employee’s record

▪ If you have both salaried and hourly paid employees, you will need to create a separate

addition for each, ensuring you name them something easily recognisable, such as

Furlough Sal and Furlough Hrly

▪ If the employee was only furloughed for part of the period and should receive normal

pay for the other part, you will need to calculate these values as the software cannot do

this for you. A suggested way of doing this would be to work out the employee’s daily

rate. You can then multiply this by the number of days in the period they worked to

establish the pay value for the part of the period they worked. Then calculate the daily

rate @ 80% multiplied by the number of days in the month they were furloughed. If the

employee’s furlough pay is being topped up, calculate the daily rate @20% multiplied by

the number of days in the month they were furloughed

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Tip: Reclaim calculations are based on calendar days in the period, not working days. We

would recommend you apply the same method when calculating the daily rate.

For example, if the employee is monthly paid, the pay period is April and the employee

was furloughed on 15th April, you would multiply the daily rate by 15 (1st-15th) for their

normal salary, then by 15 days (16th-30th) for the Furlough Pay/Top-Up

Hourly Paid employees

For hourly paid employees, we recommend you create a new pay rate with a name that is easily

identifiable e.g. Furlough or Furlough 80%.

To do this:

1. From the Company menu, choose Additions/Deductions

2. Select the next available ‘unused’ row in the grid

3. As the payment is subject to tax and NI, tick the Tax and NI columns

4. Also tick the Pen and QE columns in respect of Pensionable and Qualifying Earnings

5. Tick the Fur column; this will identify the payment as being for furlough when the reclaim

calculation is performed

6. Enter 0.80 in the Multiple column. This ensures that any hours entered using this

addition in Pay Variations will be calculated at 80% of their normal hourly rate

7. Click Save

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This new payment is now available to select in Pay Variations. To process this as a one-off

payment, enter the normal number or hours in the Temp Amount field and tick the Hours box.

To retain the value for future pay periods, enter the number of hours into the Std Amount field,

again ticking the Hours box. On this basis, payroll will calculate 80% of the employee’s normal

working hours by the rate of pay.

Things to consider

▪ If you have both salaried and hourly paid employees on the payroll, you will need to

create a separate addition for each. Be sure to name them something that is easy to

recognise to avoid mixing them up, e.g Furlough Sal, Furlough Hrly

▪ You will need to manually alter the employee’s Basic Pay value each pay period, either by

placing Basic Pay on hold in variations, or if you want to continue paying the employee

100% of their normal pay, we would advise setting up another payment in

Additions/Deductions, this time where the multiple is set as 0.20. Then, when you enter

the employee’s normal hours in Pay Variations, the system will calculate 20% of the

hourly rate. Do not tick the Furlough column for the Top-up Payment

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Original Payslip

Furloughed Payslip

Step 2: Enter required fields

In order to submit your claim, HMRC require some information so they can identify where the

claim is coming from and where the claim payment will be made. It is most likely that you will

have already entered these details as they are used for other functions in payroll, but it is worth

checking before starting to create the claim file/report.

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Company Details

Ensure that the following fields are completed:

▪ Company Name

▪ Company Address

▪ Tax District and Tax Reference

▪ Accounts Office No

▪ One of the following fields (located in the Sundry tab)

▪ Corporation Tax Reference ▪ Self-Assessment (SAUTR) ▪ Company Registration Number

Note: Bank details will also be required for the file submitted to HMRC. The system will use the

bank details held in Company | Bank Details, but if they are to be paid to a personal account

instead, you can enter alternative bank details in the Job Retention Scheme Settings screen.

Employee Details

In the Employee Details | Pay Rates | Furlough Dates section, you can enter the dates the

employee was furloughed in the Start Date and End Date fields. These dates must be entered

for any employee that has been furloughed so that the system can identify them and perform

the necessary calculations.

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Things to consider:

▪ If you know the date the employee was furloughed but do not yet know when the end

date will be you can leave it blank

▪ If a furlough Start Date is not entered, the system will not identify the employee as

having been furloughed

Step 3: Select Claim Period and Employees to include

Once you have calculated and finalised the pay period(s) and entered the required fields for

furlough, you can begin to create the Furlough Reclaim report or file for upload to HMRC.

You must ensure that periods for all pay frequencies are finalised for the claim period for the

correct employees/values to be included in the claim file/report.

From the Company Details | Sundry tab, click the Furlough button:

On the screen that appears, enter the date range that your furlough claim is for. Click Search

and the system will then find and list all employees that have a payslip in the period(s) that fall

within the selected Date Range.

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When employees are listed, the Include box will be ticked automatically, indicating that the

employee will be included in the furlough claim.

Step 4: Check and Edit Furlough values

If you paid furlough to the employees using additions/deductions that you identified as being

furlough payments, this value will be automatically populated in the Furlough Pay column. The

reclaim values are then calculated based on the furlough pay value. If you did not use specific

Additions/Deductions to pay furlough, you can enter the value manually and the system will

calculate the reclaim values based on your entry.

If you made Top-up Payments to increase the employee’s Furlough Pay to 100%, you can tick the

Auto Calculate Top-up indicator and the system will calculate the Top-up amount as 20% of the

employee’s normal pay. You can edit the amount for individual employees in the grid if you need

to.

Here are the details of the grid contents:

▪ Include: This column allows you to indicate which employees received furlough pay

within the selected date range

▪ Emp No

▪ Employee Name

▪ Tax Year: The tax year that the date range falls within. If the date range entered spans

more than one tax year, there will be an entry in the grid for each period/tax year

▪ Pay Frequency: The pay frequency in use for the employee: M indicates that the

employee is monthly paid, W = weekly, 2 = fortnightly paid and 4 = four-weekly paid

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▪ Period: The period in which the employee was paid that falls within the date range

entered. If the date range entered spans more than one pay period, there will be an

entry in the grid for each period

Payment Value: This is the total pay the employee received in the selected period. This

is the total of furlough pay, top-up pay, and any other payments made to the employee

in the period

▪ Top-up: This field is for the value of any top-up payments you made to increase the

employee’s furlough pay. This amount cannot be reclaimed but is required to calculate

the ER NI reclaim amount accurately. Initially the field will be blank. You can enter the

value manually or you can tick the Auto Calculate Top-up box for the system to

automatically calculate top-up at 20% of the employee’s basic pay

▪ Furlough Pay: This is the value of any Addition/Deduction that you created and selected

as being for Furlough pay in the selected period. If you did not create a specific

Addition/Deduction that was identified as being for furlough pay, but you did pay it as

part of their normal pay or non-specified Addition/Deduction, then you can enter the

correct value here. This value forms part of the total that you can reclaim

Note: If the Furlough Pay value exceeds the maximum reclaimable amount for the pay

frequency (e.g. monthly = £2,500) the system will cap the amount to the maximum value

allowed. If the Furlough Payment is only for part of the period, the maximum

reclaimable amount will be pro-rata’d to the number of days in the period the employee

was furloughed

▪ ER NI: This is the Employer’s NI reclaim value that the system has calculated based on

the Furlough Pay amount. This value forms part of the total that you can reclaim

▪ ER Pen: This is the Employer’s Pension reclaim value that the system has calculated

based on the Furlough Pay amount. This value forms part of the total that you can

reclaim

The grid contains totals for the Furlough Pay, ER NI and ER Pen columns; the sum of the three

values is the total amount that you can reclaim for the date range.

How Furlough Reclaim is calculated

If eligible, you will receive a grant from HMRC to cover the lower of 80% of an employee’s regular

wage or £2,500 per month (whichever is lower), plus the associated Employer National Insurance

contributions and minimum automatic enrolment employer pension contributions on that

subsidised wage.

Your furlough pay reclaim value is therefore the sum of three values:

▪ Furlough Pay

▪ Employer’s NIC

▪ Employer’s Pension

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Furlough Pay

The furlough payment you make to employees, that is 80% of the employee’s normal pay or

£2500 – whichever is lower - is reclaimed. This is a value you must calculate yourself, as the

system cannot do it for you.

Employer’s NIC

The Employer’s National Insurance contributions calculated on the furlough pay amount.

If the employee is only furloughed for part of the period, the system will pro-rata the calculation

to apply to the number of days the employee is furloughed, based on the dates you entered.

If the employee has received furlough pay only in the selected period, then the Employer’s NI

reclaim is:

Furlough Reclaim less the current Secondary Threshold (ST) multiplied by the Employer

NIC rate (13.8%)

The calculation becomes more complex if the employee was not furloughed for the whole

period:

1. NIable Pay less ST multiplied by 13.8% = Employer’s NI

2. Divide the Employer’s NI by the number of days in the pay period (e.g. for April this

would be 30 days)

3. Multiply the value at step 3 by the number of days the employee was furloughed for

in the period

If the employee was not furloughed for the whole period AND received top-up pay, the above

steps are followed plus a further step:

4. Multiply the value at step 3 by Furlough Pay divided by Furlough Pay plus top-up pay

For example: Employee was furloughed on 15th April. Their normal salary is £2,400. The

employer has agreed to top up the furlough pay so that they receive 100% of salary whilst

furloughed. Their pay consists of the following elements:

▪ Basic Pay £1,200 (£2,400/30 days x 15 days)

▪ Furlough Pay £960 (£2,400/30 days x 80% x 15 days)

▪ Top-up Pay £240 (£2,400/30 days x 20% x 15 days)

Employer’s NI Reclaim:

1. £2,400 – ST £732 = £1,668 x 13.8% = £230.184

2. £230.184/30 days = £7.6728

3. £7.6728 x 15 days = £115.092

4. £115.092 x £960/£1,200 = £92.07: This is the Employers NIC reclaimable value

NOTE: The system can only perform this calculation where Employee Furlough Dates,

Furlough Pay and (if applicable) Top-up Pay values exist.

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Employer’s Pension

The employer’s pension reclaim amount is calculated on the Furlough Pay amount less the

current Automatic Enrolment Qualifying Earnings threshold at a rate of 3%. This calculation is

used regardless of the type of pension scheme you use and the rate of employer’s pension you

contribute. For example, your pension scheme might be based on pensionable earnings and not

use the qualifying earnings threshold, or you might contribute more than 3% - the method used

will still be based on the qualifying earnings and at 3%.

If the Furlough Pay is less than the Qualifying Earnings Lower threshold (for 2020/2021 this is

£520 p/m or £120 p/w) then you cannot reclaim any employer’s pension.

If the employee has received furlough pay only in the selected period, and the furlough pay

exceeds the current Qualifying Earnings Lower threshold then the Employer’s Pension reclaim is:

Furlough Reclaim less the current Qualifying Earnings Lower threshold multiplied by 3%

The calculation becomes more complex if the employee was not furloughed for the whole

period:

1. Divide the Qualifying Earnings Lower Threshold by the number of days in the period

2. Multiply the value at step 1 by the number of days the employee was furloughed for

in the period

3. Furlough Pay less the value at step 2 multiplied by 3% = Employer’s Pension reclaim

For example: Employee was furloughed on 15th April. Their normal salary is £2,400 per month.

The employer has agreed to top up the furlough pay so that they receive 100% of salary whilst

furloughed. Tax Year is 2020/2021, so the qualifying earnings lower threshold is £520. Their pay

consists of the following elements:

▪ Basic Pay £1,200 (£2,400/30 days x 15 days)

▪ Furlough Pay £960 (£2,400/30 days x 80% x 15 days)

▪ Top-up Pay £240 (£2,400/30 days x 20% x 15 days)

Employer’s Pension Reclaim:

1. £520/30 days = £17.333333

2. £17.333333 x 15 days = £260

3. £960 - £260 x 3% = £21.00: This is the Employer’s Pension reclaimable amount

NOTE: The system can only perform this calculation where Employee Furlough Dates,

Furlough Pay and (if applicable) Top-up Pay values exist.

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Step 6: Enter Bank and Contact Details for the Reclaim

Personal Bank Details

Before creating the CSV file for upload to HMRC you need to specify the details of where the

reclaimed value will be sent.

These details are entered in the Bank Details tab within the Job Retention Scheme Settings

screen:

Contact Details

Use the screen to also enter details about the person making the claim, in the Contact Name

and Contact No. For example, if it is you submitting the claim for the company, enter your

details here.

Step 7: Print the Furlough Reclaim report

Once you have checked the values in the Job Retention Scheme Settings screen, click Print

Report for a copy of the report for your records. This report contains all the values from the Job

Retention Scheme Settings screen.

It is important that you print this report, even though it is only for your own records and not

submitted to HMRC, as the values in the Job Retention Scheme Settings screen are not saved

elsewhere within the software. The report can also be used as an aide to assist you if you are not

uploading a file to HMRC for the Furlough Reclaim and are inputting the values manually on

HMRC’s portal instead.

NOTE: You only need to complete the Bank Details fields if the reclaim amount is being

sent to a personal bank account that differs from the bank details held within Company

Details | Bank Details screen.

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Step 8: Create the Furlough Reclaim file for upload to HMRC

Once you have checked the values in the View/Amend Furlough Values screen, click Create

CSV File. You will be asked to select a location for saving the file; make a note of the location as

you will need to browse to it when you upload the file to HMRC.

The file created matches the format expected by HMRC.

NOTE: Current HMRC guidance stipulates that you should only upload a file to them for

furlough reclaim where there are 100 or more employees to submit; if you have fewer

than 100 employees, you do not upload a file and instead manually enter the details

yourself on their portal. It is your responsibility as an employer to establish which

method you need to follow.

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Other important information

Employment Allowance

If you are claiming Employment Allowance, you must not claim Employer’s NIC until you have

met your threshold. For example, if you are claiming Employment Allowance and have £4000

outstanding if the Employer’s NIC due is less than £4,000 your Employer’s NIC claim will be nil.

Direct Earnings Attachments (DEA)

The Department of Work and Pensions (DWP) is writing to employers to ask them to temporarily

stop benefit debt repayments. You should not make any DEA deductions from your employees’

pay in April, May or June 2020. You will be told if this will be extended.

To do this in IRIS PAYE-Master

1. For any employee with a DEA attachment, select the Att’ments icon

2. Change the Status to On-Hold Indefinitely. This will prevent any further deductions from

being made

3. When advised to start taking the deductions again (currently planned for July 2020) change

the Status back to Active

4. Click Save

For more information see: https://www.gov.uk/government/publications/direct-earnings-

attachments-an-employers-guide

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Additional Software and Services Available

IRIS AE Suite™

The IRIS AE Suite™ works seamlessly with all IRIS payrolls to easily manage auto enrolment. It will assess employees as

part of your payroll run, deduct the necessary contributions, produce files in the right format for your pension provider*

and generate the necessary employee communications.

IRIS OpenPayslips

Instantly publish electronic payslips to a secure portal which employees can access from their mobile phone, tablet or

PC. IRIS OpenPayslips cuts payslip distribution time to zero and is included as standard with the IRIS AE Suite™.

IRIS Auto Enrolment Training Seminars

Choose from a range of IRIS training seminars to ensure you understand both auto enrolment legislation and how to

implement it within your IRIS software.

Useful numbers

HMRC online service helpdesk HMRC employer helpline

Tel: 0300 200 3600

Fax: 0844 366 7828

Email: helpdesk@ir-efile.gov.uk

Tel: 0300 200 3200

Tel: 0300 200 3211 (new business)

Contact Sales (including stationery sales)

For IRIS Payrolls For Earnie Payrolls

Tel: 0344 815 5656

Email: sales@iris.co.uk

Tel: 0344 815 5676

Email: earniesales@iris.co.uk

Contact Support

Your Product Phone E-mail

IRIS PAYE-Master 0344 815 5661 payroll@iris.co.uk

IRIS Payroll Business 0344 815 5661 ipsupport@iris.co.uk

IRIS Bureau Payroll 0344 815 5661 ipsupport@iris.co.uk

IRIS GP Payroll 0344 815 5681 gpsupport@iris.co.uk

IRIS GP Accounts 0344 815 5681 gpaccsupport@iris.co.uk

Earnie or Earnie IQ 0344 815 5671 earniesupport@iris.co.uk

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